Risk And Reward For Mining Investment In Bolivia (2cb9f10b-dccb-4dec-86c1-12dc37ce666a)

A financial-economic model incorporating physical, market, and policy variables is developed for mining investment in Bolivia. Additional risk criteria emanating from political instability. new mining legislation, recent environmental regulations, and a new minerals taxation system are accounted for and are integrated into the investment decision model. Results of the model indicate that geologic and market variables have the dominant effect on the investment-worth function. Among policy variables, exchange rate and taxation policies have the most significant influence. Depreciation allowance for infrastructure development has negligible weight in the investment-worth function. The business structure of the firm considering investing in the Bolivian Polymetallic Project is found to be an instrumental factor in the investment-worth outcome. Specifically, undiversified mining companies whose operations exclude zinc production as the primary source of revenue would benefit most from adoption of this project.